Wells Fargo Cut to “Hold” at Deutsche Bank; No Upside Left (WFC)


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Banking giant Wells Fargo & Company ( WFC ) on Tuesday caught a big downgrade from analysts at Deutsche Bank.

The firm cut its rating on WFC from "Buy" to "Hold" with a $36 price target, suggesting very little upside to the stock's Monday closing price of $34.70.

A Deutsche Bank analyst commented, "We believe WFC is best positioned for mortgage activity remaining stronger than expected given its market share of about one-third. And gains on sale spreads remain very wide (and have seemingly increased of late). However, both of these are well known and we believe already reflected in the stock. Outside of mortgage, other trends may be a bit sluggish reflecting further NIM pressure (NIM to decline about 15bps in 3Q), only modest balance sheet growth, and likely higher-than-expected expenses (even outside of those related to mortgage volumes)."

Continuing, "Stepping back longer term, we think WFC could be a winner from an eventual revamp in the mortgage finance model (i.e. the GSEs). However, increasing uncertainty in 2013 over how this plays out may weigh on/limit upside to WFC."

Wells Fargo shares posted modest gains in premarket trading Tuesday.

The Bottom Line
Shares of Wells Fargo ( WFC ) have a 2.54% dividend yield, based on last night's closing stock price of $34.70. The stock has technical support in the $30-$32 price area. If the shares can firm up, we see overhead resistance around the $36-$37 price levels.

Wells Fargo & Company ( WFC ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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